Who Is Trump's Treasury Pick Scott Bessent And Why Does Wall Street Like Him?

The market has experienced a lot of activity since the results of the presidential election. From cryptocurrencies like dogecoin experiencing significant spikes (and getting closer to the $1 mark) to growing concerns over the future of Social Security, there are many possible economic policies that could be put into place under the incoming Trump administration. This has left many paying especially close attention to the president-elect's cabinet choices, many of which have made waves and headlines. However, while many of Donald Trump's selections have caused controversy and even chaos, one selection in particular has felt like a breath of fresh air (for investors, that is).

Trump announced he would nominate hedge fund executive Scott Bessent to be his Treasury secretary, a role that is integral to implementing the White House's economic agenda. Bob Elliott, CEO of Unlimited Funds, explained to Politico why Bessent's selection has received such a positive reaction from Wall Street, "The biggest risk is that you have ideologues pursuing policy regardless of consequence. The thing about a person who has run money for several decades is that they — almost by definition — have to be agile and responsive to market conditions. It's in their blood." However, it's worth noting that as a career hedge fund manager, Bessent brings no government experience to the role. Similarly, many have suggested that Bessent, or another Trump pick, could end up as the new Federal Reserve chair once Jerome Powell's term is up in 2026, leaving some wondering if his role as Treasury secretary is merely a stepping stone to something else.

As the election highlighted, inflation is at the top of the list for most Americans when it comes to their biggest financial concerns. How the incoming White House administration handles inflation, and how its policies might help or hurt current inflation goals, can and will have a significant impact on consumers. The stock market's rally after the announcement of Scott Bessent as Donald Trump's Treasury pick suggests that Wall Street believes Bessent can continue to guide the economy on its current trajectory toward lower inflation. Similarly, since Bessent has a Wall Street background, many believe he'll be sympathetic, and inherently helpful, for the equity market. Ultimately, Wall Street sees Bessent as one of its own.

It also can't be stressed enough how much Wall Street hopes that Bessent can curb some of the president-elect's more extremist policies. In particular, Trump's proposed tariffs (we broke down what they are and who pays for them here), which could have major financial implications for both Wall Street and consumers alike. In an interview with CNBC, Bessent explained, "I would recommend that tariffs be layered in gradually." Bessent also went on to explain how Trump's tariffs could eventually balance out with other policy measures: "If you take that price adjustment coupled with all the other disinflationary things President Trump is talking about, we're going to be at or below the 2% inflation target again." As of the October 2024 Consumer Price Index, inflation was at 2.6% in the U.S., which was a slight uptick over the month prior.

While Scott Bessent might seem like a calmer hand on the pulse of the economy, it's important to realize his loyalty to Donald Trump's controversial economic policies. This includes prioritizing deregulation. While business deregulation can, in some cases, help with economic growth, note that the extent of this effect can depend on how much regulation already exists within a market or industry. Plus, deregulation can ultimately hurt consumers through a lack of necessary rules, regulations, and protections on everything from food to medicine to vehicles. Not to mention, while deregulation can certainly help a business's profit margin, it rarely leads to better conditions for workers. In fact, deregulation could roll back some of the workplace protections that currently exist in addition to further harming the environment through a lack of regulation on pollution.

The other tricky thing to keep in mind is how, exactly, Bessent is supposed to enact Trump's policies while simultaneously keeping inflation down and the economy stable. For starters, Trump's proposed tax cuts (including things like eliminating taxation on tips, exempting Social Security income from taxation, and lowering the corporate tax rate) could lead to massive losses in federal revenue and an increase in the national debt (which already hit and passed a record high $35 trillion in 2024). Trump has also promised blanket tariffs on all imports as well as a promise to increase domestic energy production. All of these proposals can (and more than likely will) affect interest rates, disrupt supply chains, and drive up prices for consumers.